Saudi Arabia’s Capital Market Authority (CMA) has assigned a specialised team to review telecoms operator Etihad Etisalat’s (Mobily’s) financial statements and all other related documents, following an investigation to determine any violations by the company towards the bourse rules. The market regulator revealed that it suspects Mobily of breaching Articles (49) and (50) of the Capital Market Law (CML) and section C of Article (42) of the Listing Rules. Article 49 of the CML prohibits several activities, including: creating ‘a false or misleading impression’ relating to the price or value of a stock, trading securities that do not involve a true transfer of ownership, trading a stock to induce third parties to do likewise and buying or selling a stock to stabilise its price, while the second clause prohibits trading on inside information not publicly available and that which the insider knows ‘would have a material effect on the price or value of such a security’. Section C of Article (42) meanwhile states that once a company’s directors approve its financial results, these must not be revealed to shareholders or third parties prior to official release.
As previously reported by CommsUpdate, in November 2014 the CMA launched an investigation into Mobily after the company restated its earnings for an 18 month period due to ‘accounting error’. In February 2015 Mobily once again revised its unaudited annual financial results for the twelve months ended December 2014, by restating its previously announced net loss of SAR220 million (USD58.6 million) for the period to SAR913 million, due to ‘an additional charge of SAR1.13 billion’. Shortly after, the CMA suspended the trading of Mobily’s shares on the Saudi Stock Exchange (Tadawul), with the ban to remain in place until Mobily explains the reasons which led to its net losses.